The Comparison of Bonus Sizes: Losing Super Bowl Team vs. Average Wall Street Employee
The Super Bowl is not just a game of football; it’s an event that captivates millions of viewers around the world. But while the players on the field battle it out for the ultimate victory, there’s another competition happening behind the scenes – a comparison of bonus sizes. In this article, we delve into the financial rewards for both the losing Super Bowl team, the San Francisco 49ers, and the average Wall Street employee.
The San Francisco 49ers may have lost in an overtime heartbreaker against the Kansas City Chiefs, but they can find some solace in the postseason bonus money coming their way. Thanks to the NFL Players Association’s collective bargaining agreement, each 49ers player is set to receive a cumulative $263,000 just for their postseason run. This sum might leave some well-heeled financial professionals feeling cold about their own year-end performance pay.
According to a report from the New York State Comptroller’s Office, the average 2022 bonus on Wall Street was $176,700. This figure pales in comparison to what the 49ers players will receive. Each player will get $45,500 for their first-round bye, $50,500 for winning the divisional playoff round, $73,000 for winning the conference championship, and $89,000 for being on the losing team at the Super Bowl. Meanwhile, each Kansas City Chiefs player is slated to receive $338,000 in bonus pay. The winning team’s bonus amounts are even higher, with the Chiefs’ players receiving $50,500 for their Wild Card win, $50,500 for the divisional round, $73,000 for the conference championship, and a whopping $164,000 as the winning Super Bowl team.
In the world of professional sports, six-figure sums are considered small potatoes. Super Bowl MVP Patrick Mahomes, for example, is working under a 10-year contract worth an astounding $450 million. When compared to these astronomical figures, the Wall Street bonuses seem insignificant. However, it’s important to note that while the NFL bonuses are guaranteed, Wall Street bonus amounts can be affected by market fluctuations.
In 2022, Wall Street experienced a decline in bonuses due to inflation and rising interest rates. The average year-end payout dropped by 26% from the previous year, marking an average bonus of $176,700 compared to $240,400. The total amount of money allocated for bonuses also decreased from $42.7 billion to $33.7 billion. Although the stock market made a comeback in 2023, projections for 2024 indicate that Wall Street bonuses will either remain flat or decline further.
Alan Johnson, managing director at Johnson Associates, a financial-services compensation consulting firm, explains that bonuses in the range of $300,000 to $500,000 are common on Wall Street. Seven-figure bonuses are reserved for the top 5% to 10% of individuals in a firm. These bonuses play a significant role in a Wall Street employee’s compensation, with lower-level employees seeing their bonuses make up 50% of their pay and those with seven-figure bonuses relying on them for 60% to 80% of their pay.
While the comparison between football and finance may seem unrelated at first glance, there are striking similarities between the two careers. Both involve cutthroat competition and high levels of stress, leading to short-lived careers. Financial services careers typically end in a person’s early 50s, while football careers are even shorter. The amount of money earned in these careers should reflect the intensity and competitiveness they entail.
When it comes to taxes on bonuses, the Internal Revenue Service (IRS) gets its share of the pie as well. Bonuses, whether in sports or other fields, are entirely taxable. Employers have two options for withholding taxes on bonuses – they can either lump the bonus with regular wages or pay it separately. The more common approach is to pay the bonus separately and withhold 22% in federal taxes for amounts under $1 million, and 37% for amounts above $1 million.
For NFL players, bonuses are separate from their regular paychecks and are treated as ordinary income. It’s worth noting that if the bonus amount pushes the recipient into the top tax bracket with its 37% marginal rate, they will have to pay more to the IRS at tax time.
In conclusion, the comparison between the bonuses received by the losing Super Bowl team and the average Wall Street employee highlights the vast differences in compensation. While NFL players can rely on guaranteed bonuses outlined in their agreement with the league, Wall Street bonuses are subject to market fluctuations. Despite this, both careers come with intense competition and short-lived opportunities for financial success. Ultimately, whether it’s on the field or in the world of finance, the pursuit of victory and financial rewards remains a grind for those involved.
